The role of employees empowerment on risk management: An application in Libyan banks

The Libyan economy is under the influence of current political risks as well as bottlenecks and problems in all economic sectors operating in Libya, resulting in a sudden halt in petroleum products following the revolution followed by major economic activities and further decline in oil exports. All of these factors played a major role in the downturn in the Libyan economy because the Libyan economy is based on oil revenues, which account for more than 90% of its total revenues and negatively affect other sectors. The banking sector was not immune to these current economic risks, and banks have also been affected by conflicts in banking policies, particularly with regard to the cancellation of the interest rate and the withdrawal of money from the banking system. Therefore, the banking sector faced non-financial and financial risks, particularly liquidity risk. In fact, there are several studies on risk issues, including Basel standards, and how to manage them. However, none of these studies focused on human resources and their importance in managing these risks. There are also many studies on empowerment that affect various management factors. The thesis focuses on human resources with a high level of talent and skills and their role in strengthening and using their skills to overcome the banking risks faced by the banking sector. This is of great importance as the first study addressing the strengthening of human resources in effective risk management in the banking sector, especially in Libya. In this context, the main purpose of the thesis is to investigate and investigate the role of human resources strengthening in eliminating risks in the banking sector. In this context, the impact of employees' empowerment on effective liquidity, credit, market and operational risk management has been demonstrated. For the purpose of the study, a questionnaire method was used to collect data from banks operating in the eastern part of Libya. The survey was distributed to 320 employees and six banks were selected as targets to investigate the risks faced by the banking system as a result of the current political crisis. As a result of the research, it was determined that there is a positive and statistically significant relationship between the dimensions of employees' empowerment and effective risk management. In the study, it was seen that issues such as training, incentives and participation, sharing of authority, teamwork for employees are important in risk management. In addition, the risk management and strengthening of human resources among the banks in Benghazi and Al Bayd have been found to differ in their dimensions. The findings in this study seem to be consistent with many findings in the literature. Key Words: Employees' empowerment, liquidity risk, credit risk, market risk, operational risk, effective risk management.